FREE NEWSLETTER: Econintersect sends a nightly newsletter highlighting news events of the day, and providing a summary of new articles posted on the website. Econintersect will not sell or pass your email address to others per our privacy policy. You can cancel this subscription at any time by selecting the unsubscribing link in the footer of each email.

US stock future indexes are flat (SPY -0.02%) after Saudi Arabia and Iran have dashed hopes that OPEC oil producers could clinch an output-limiting deal in Algeria this week. Markets are expected to open flat and make session highs early.

What Is Moving the Markets

LONDON (Reuters) - World shares swung higher and the Mexican peso surged more than two percent on Tuesday, as investors awarded the first U.S. presidential debate to Democrat Hillary Clinton over Republican Donald Trump.

ALGIERS (Reuters) - Saudi Arabia and Iran on Tuesday dashed hopes that OPEC oil producers could clinch an output-limiting deal in Algeria this week as sources within the exporter group said the differences between the kingdom and Tehran remained too wide.

LONDON (Reuters) - Crude oil futures fell on Tuesday as optimism faded for an output-limiting deal from an oil producer meeting in Algeria that has so far failed to yield any agreement to curb one of the worst supply gluts in history.

GENEVA (Reuters) - The World Trade Organization cut its forecast for global trade growth this year by more than a third on Tuesday, reflecting a slowdown in China and falling levels of imports into the United States.

(Reuters) - A shareholder class action lawsuit was filed against Wells Fargo & Co on Monday that alleged the firm misled investors about its financial performance and the success of its sales practices.

FRANKFURT (Reuters) - A German privacy regulator ordered Facebook on Tuesday to stop collecting and storing data of German users of its messaging app WhatsApp and to delete all data that has already been forwarded to it.

(Reuters) - Caesars Entertainment Corp said on Tuesday its major creditors supported the proposed terms of a plan to push its main operating unit out of bankruptcy, making it "optimistic" of winning approval from other creditors.

FRANKFURT (Reuters) - Volkswagen said on Tuesday its finances remained robust as it sought to allay concerns after a share fall which some traders linked to a media report which said the U.S. Justice Department was assessing whether fines could put the automaker out of business.

The "most systemically dangerous bank in the world" is in grave trouble. Despite exclamations that there is "no need for additional capital" and that "Deutsche Bank is no Lehman" investors are fleeing the bank's assets en masse as professionals pile in to buy counterparty risk protection. With the only thing standing between bank runs and stability being the confidence of depositors, and knowing full well that everybody lies when it gets serious, one witty trader noted, "if it walks like Lehman, and talks like Lehman... it is Lehman."

Deutsche stock is collapsing...

And counterparty risk hedges are spiking...

as the bottom end of DB's capital structure is starting to reflect a serious haircut...

The question everyone is asking this morning is who won the debate. The answer is: it depends who you ask.

To be sure, conservative website Drudge Report had Trump a blow out winner with over 82% of the nearly 500,000 votes cast, which however can probably be explained by the self-fulfilling ideology of most of the site's visitors.

More surprising was a poll by CNBC, where of the 748,000 votes cast as of this morning, Trump had collected nearly two-thirds of the votes, although Trump's outperformance here may be explained by the fact that this, too, was linked off the Drudge main page, the same as a Time poll.

To be sure, the markets' take was different, and as we noted last night, looking at the most direct proxy of Trump performance in recent weeks, namely the move in the Mexican Peso, traders "handed" it to Hillary.

As WSJ noted this morning, the Mexican currency was up roughly 1.5% against the U.S. dollar Tuesday, showing a sharp surge during the debate, which pitted Mrs. Clinton against Donald Trump. Other emerging market currencies, from the South African rand to Indonesia's rupiah, also rallied on a belief that Trump presidency is now less likely.

Amid the confusion, the Mexican peso has emerged as a market proxy for the chances of a Tr ...

While we await every new headline out of Algiers, overnight Goldman threw in the towel on its "transitory" oil market bullishness, and in a note by Damien Courvalin looking "Beyond Algiers, Weakening Oil Fundamentals", the bank cut its Q4 oil price target from $50 to $43, as the bank admits the previously anticipated rebalancing will take longer to achieve, and now expects "a global surplus of 400 kb/d in 4Q16 vs. a 300 kb/d draw previously."

Speaking of the Algiers meeting, Goldman also notes that "while a potential deal could support prices in the short term, we find that the potential for less disruptions and still relatively high net long speculative positioning leave risks skewed to the downside into year-end. Importantly, given the uncertainty on forward supply-demand balances, we reiterate our view that oil prices need to reflect near-term fundamentals - which are weaker - with a lower emphasis on the more uncertain longer-term fundamentals."

Here is the summary from Courvalin:

Oil prices have remained range bound ahead of the OPEC consultation in Algiers this week and as production disruptions have yet to meaningfully ramp up. Statements by participants suggest potentially greater collaboration between OPEC members than in previous attempts, although the outcome of this advisory meeting remains uncertain. Our production forecast continues to reflect a seasonal Saudi production decline into year-end and no growth elsewhere (the equivalent of a deal) with OPEC exc. Libya/Nigeria production growth only resuming in 1Q17. ...

Make
a Comment

Econintersect wants your comments,
data and opinion on the articles posted. As the internet is a
"war zone" of trolls, hackers and spammers - Econintersect must balance its
defences against ease of commenting. We have joined with Livefyre
to manage our comment streams.

To comment, using Livefyre just click the "Sign In" button at the top-left corner of
the comment box below. You can create a commenting account using your
favorite social network such as Twitter, Facebook, Google+, LinkedIn or
Open ID - or open a Livefyre account using your email address.

You can also comment using Facebook directly using he comment block below.

Econintersect Live Market

Print this page or create a PDF file of this page

The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.